Abstract

The grocery industry evolved from mom-and-pop stores to mega-markets to online grocery buying, with many different forms along the way. The global market for groceries in 2000 is over $2 trillion. The online grocery segment of the market is expected to reach $34 billion by 2002, a thirty-three fold increase from 1998. This tutorial examines the issues surrounding online groceries and looks closely at fourteen examples from the Americas, Europe, and Australia. The online market is currently one of growth, not profits. Two key components of profitability for online vendors are the ability to generate sufficient volume, while keeping delivery costs low. The Internet also impacts business-to-business relations among grocers. This tutorial describes key online grocery firms including Peapod, NetGrocer, Streamline, WebVan, Ruok@Net, Albert Heijn, Disco, Ykköshalli, Shoplink, Coles and Woolworths. Each of these companies represents different business models, with differing organizational structure and scope of operations. Each has its own set of strengths and weaknesses. To date, no company stands out from the rest with a proven model of success for dealing with national delivery, providing perishable food products, or achieving acceptable profits. This article also analyzes the attractiveness of the online grocery market for entry by both Internet companies and traditional grocers. Environmental factors, store features, and household specific factors are examined in light of technical, cultural, organizational, and economic issues facing grocers and their consumers.